Industry watchers and experts called for caterers to swiftly respond to new dining and consumption trends when developing franchise business models and to answer consumers' demands for higher quality dining.

At the same time, business operators should also stick to the core value of bringing quality goods and services to consumers.

"We encourage innovation in the catering business," said Director Pei Liang at the China Chain Store & Franchise Association. "Caterers should spend more time building long-standing brands and enhance collaboration."

Online channels are also proving to be an important way for caterers to grab consumers' attention and increase foot traffic, he also noted.

The lack of catering chains also meant there's a shortage of professional services that are dedicated to catering companies, such as supply chain management and human resources services, he told an industry forum in Shanghai.

"An oversupply of restaurants in the domestic market has prevented caterers from seeking scalable and high quality development," he added.

Most of China's catering businesses are small-scale and stand-alone stores, yet they still have their unique advantages and positions in terms of acquiring consumers, especially in regional markets.

According to a joint report by Meituan Dianping and the CCFA, the number of franchise canteens in China climbed 23 percent in 2018, and the growth rate in third and fourth tier cities more than doubled that level at 52 percent.

Yet only 5 percent of Chinese caterers belong to franchise operations, while in the US about a third of restaurants belong to canteen franchises.

The booming Internet industry and digitalization trend has offered new opportunities for the catering business to elevate the pace of development, especially in lower tier cities.

The number of franchise restaurants will climb in the coming years with the continual urbanization process, commented Meituan Dianping senior vice president Zhang Chuan.

Franchising has been an important business model for canteen operators to expand quickly.

A recent Frost & Sullivan report suggests that restaurant chains' income in China is expected to grow at an annual average of 10.3 percent in the next three years, compared to around 9.5 percent at stand-alone stores. The total restaurant market is estimated to reach 6.28 trillion yuan (US$924 billion) by 2022.